2004 (9) TMI 314 - AT - Income Tax

Summary

Issues:
Assessment under section 115BB of the IT Act, 1961 for a prize received through a lucky coupon scheme.

Analysis:
The dispute in this case revolves around the assessment of a sum of Rs. 3,72,644 under section 115BB of the IT Act, 1961, for the assessment year 2000-01. The assessee had invested in Kisan Vikas Patra and received a prize of a Maruti car under a lucky coupon scheme run by the Punjab State. The Punjab Government had undertaken to pay income tax on the prize distributed in the scheme. The Assessing Officer (AO) assessed the amount under section 115BB, treating it as assessable income. The CIT(A) upheld the assessment, stating that the assessee had participated in a lottery, making the prize and TDS liable to tax.

The assessee contended that the prize and TDS were capital receipts and not liable to tax as they were not received through lottery participation. Reference was made to the Madras High Court decision and the definition of 'lottery' under the Lotteries (Regulation) Act, 1998. The assessee argued that the Explanation added to section 115BB by the Finance Act, 2001, was not retrospective.

The Tribunal considered the contentions of both parties and observed that the Punjab Government had undertaken to pay income tax on the prize money, and the prize was received without any tax deduction. The Tribunal noted that the tax had been deposited by the Government of Punjab, and the assessee was entitled to the Maruti car without any tax liability. As per section 205 of the IT Act, where tax is deducted at source, there is a bar against direct demand on the assessee. Since the tax had been paid by the Punjab Government, the assessee was not required to pay any further tax. The Tribunal concluded that the issue of taxability of the prize was of academic interest, as the tax liability had been discharged by the Punjab Government, and the assessee had no right to claim a refund of the tax paid.

In light of the above analysis, the Tribunal dismissed the appeal of the assessee, stating that it was unnecessary and devoid of merit.